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Korea keeps base rate at 1¾% as low oil prices suppress inflation
By Toni Weeks
San Luis Obispo, Calif., April 9 – The Bank of Korea’s Monetary Policy Committee decided at a meeting on Thursday to keep the base interest rate unchanged at 1¾%, according to a bank policy statement. The bank last lowered the rate by 25 basis points to 1¾% from 2% in March, according to a bank policy statement.
The committee said that based on current information, although the trend of economic recovery in the United States has been sustained, and improvements have also continued in the euro area, economic growth in emerging market countries, including China, has slowed.
The committee said it expects that the global economy will sustain its modest recovery going forward, centering on advanced economies like the United States, but believes that the possibility exists of it being affected by changes in the monetary policies of major countries, the weakening of economic growth in emerging market countries and geopolitical risks.
Looking at the Korean economy, the bank added that domestic demand activities such as consumption and investment appear to have improved, but exports have decreased, mostly due to declines in the unit prices for petroleum products, and the sentiments of economic agents have also not clearly recovered.
On the local employment front, the unemployment rate has risen somewhat, due mainly to an expansion in job search activities, while the employment-to-population ratio has also increased as the number of persons employed has steadily grown.
Consumer price inflation fell to 0.4% in March from 0.5% in February, mainly due to decreases in prices of agricultural, livestock and fisheries products. Core inflation excluding agricultural and petroleum product prices fell to 2.1% from 2.3% in February, owing to a slowdown in the rate of industrial product price increases.
Looking ahead, the committee said it forecasts that inflation will continue at a low level due mainly to the effects of the low oil prices.
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